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Discussion Starter · #1 ·
How many one man shops out there are sole proprietors and how many are LLC's? Is there any reason not to go with the LLC?
I have been a licensed electrical contractor in NC as a sole proprietor since 2003, but only part time as I have always worked in industrial plants for other companies. I am getting tired of the politics and intend to go full time on my own this year. Have already met with my CPA and will be meeting with my attorney this week to discuss an operating agreement for an LLC that would structure the business for my protection.
 

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How many one man shops out there are sole proprietors and how many are LLC's? Is there any reason not to go with the LLC?
I have been a licensed electrical contractor in NC as a sole proprietor since 2003, but only part time as I have always worked in industrial plants for other companies. I am getting tired of the politics and intend to go full time on my own this year. Have already met with my CPA and will be meeting with my attorney this week to discuss an operating agreement for an LLC that would structure the business for my protection.
LegaZoom.com good buddy. Use the offercode macmikeman for a fantastic 0% discount on a llc customized for your state starting at $99 dollars. Can't beat that.
 
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I am a LLC , I run a small 4 employee contracting business in upstate NY. Why I went to a LLC was more for Liability reasons..If for whatever reason you could be sued if your a LLC they can only take assests from the business only...It doesnt even have to be poor workmenship..say you or one of your guys gets into a accident with one of the company vehicles you could be sued. There are also some tax advantages but I leave that to my accountant. My LLC ended up costing me around $1500.00 well worth it to me for peace of mind..
 

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I am a LLC , I run a small 4 employee contracting business in upstate NY. Why I went to a LLC was more for Liability reasons..If for whatever reason you could be sued if your a LLC they can only take assests from the business only...It doesnt even have to be poor workmenship..say you or one of your guys gets into a accident with one of the company vehicles you could be sued. There are also some tax advantages but I leave that to my accountant. My LLC ended up costing me around $1500.00 well worth it to me for peace of mind..
I'm not even an attorney, I'm an orthodontist but even I could bust thru your LLC in a courtroom if you left poor workmanship laying around on a job that later burned or shocked somebody.
 

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Discussion Starter · #6 ·
Forming an LLC in NC is an easy process, there is a 3 page online Articles of Organization form to fill out and the fee is $125. The operating agreement is a separate document that governs the business structure and can supplant the basic structure in the general statutes. It does not have to be included with the Articles of Organization.
According to my attorney, the operating agreement is where the liability protection is maximized, especially for the small shops. According to him and the research I have done, having a well written operating agreement is viewed very favorably by the courts in the event if a lawsuit and protects the owner from personal liability except in extreme cases.
I was just wondering if I had missed something when I posted my original question in regards to being a sole proprietor, if there was another avenue other than an LLC.
 

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macmikeman, maybe if I was grossly negilent but in NYS (according to my attorney and accountant) the only assests anyone is allowed to go after in a lawsuit if your a LLC is the business assests....hopefully after 30 years in business I never have to find out!!
 

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BT..I dont think so..but again Im in NYS...My lawyer had me go from a sole proprietor right to a LLC ..Now I believe there are different forms of a LLC.. I know I am a LLC
"S" corp as far as the Federal and State Govt is concerened.
 

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Discussion Starter · #9 ·
For tax purposes an LLC taxed as an S-Corp makes sense and is probably the way I will set it up.
My understanding is that the operating agreement protects you by defining the way the LLC is run, such as setting up the fiscal year, who is responsible for accounting, how new members are admitted and their capital investment, how the assets are liquidated, etc. To the courts this would show that the LLC is a separate entity from the owner which gives the owner the maximum personal liability protection.
 

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macmikeman, maybe if I was grossly negilent but in NYS (according to my attorney and accountant) the only assests anyone is allowed to go after in a lawsuit if your a LLC is the business assests....hopefully after 30 years in business I never have to find out!!
This is the issue that I take with the veil of corporate protection.....It really no longer exists. Case law.....I have watched a lot of t.v., so how hard could it be:laughing::laughing:....seems to constantly be evolving. Years ago they would never have gone after the CEO of a corporation for the problems of the corporation, but those days appear to be gone.

In talking with my lawyers and accountant, you do receive additional protections, but if they have enough money and will, they will ultimately either get what they want, or bring your reputation down in the process. I would still recommend at some point taking that step, but don't for one second think you are free and clear.
 
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